Business

Business closures and suspensions on the rise

2015 will again see a new record set in the number of enterprises closing their doors or suspending operations.

by Thu Hoang - Anh Nhi

According to figures from the General Statistics Office (GSO) released recently, 13,818 business closed or suspended operations in October, 46.6 per cent higher than in September.

In the first ten months the number of businesses closing or suspending operations stood at 67,805, virtually the same as the 67,823 recorded in all of 2014. The number of business closing or suspending operations will certainly set new record in 2015 after rising continuously over recent years, from 53,922 in 2011 to 54,261 in 2012, 60,737 in 2013, and 67,823 in 2014.

In the first ten months 7,641 businesses completed procedures tocease operations, while 60,164 enterprises suspended operations for a specific period or are waiting to register a business code.

Among those experiencing difficulties and forced to close or suspend operations, 21,633 were single member limited liability companies (35.9 per cent), 19,208 limited liability companies with two members (31.9 per cent), 11,514 joint stock companies (19.3 per cent), 7,807 private enterprises (12.9 per cent), and two joint venture companies.

Recent volatility in the business sector shows that macroeconomic improvements have not supported business performance and development, according to economic expert Ms. Pham Chi Lan. Some government policies, in addition, have been adjusted towards simply collecting financial resources, creating difficulties in their operations.

Number of businesses closing or suspending operations, 2011-2015

The difficulties facing domestic businesses make it hard for Vietnam to compete with other countries in the context of international integration, especially with the ASEAN Economic Community (AEC) to come into being at the end of this year.

Foreign enterprises not only look at advantages such as low labor costs and market potential but also pay interest in the performance of domestic businesses when considering whether to invest in Vietnam, according to Mr. Kobayashi Yoichi, Chairman of Japan-Mekong Economic Cooperation.

Vietnam should consider adjusting policies towards supporting domestic businesses, encouraging them to overcome the difficulties and develop in a stable manner, according to Ms. Lan. “It is a pity, as 2015 was to be the year of businesses, but what has been done for business remains meager,” she said.

According to the GSO figures there were 9,195 new enterprises established in October with registered capital of VND65.2 trillion ($2.9 billion), an increase of 30.6 per cent in number and 102.8 per cent in capital compared to September.

The average registered capital of a newly-established enterprise in October was VND7.1 billion ($318,009), up 12.1 per cent against September. Job creation by new enterprises in October stood at 157,900, a 25.4 per cent increase compared to September.

During the month 3,350 enterprises restarted their business operations, an increase of 121.1 per cent over September.

In the first ten months there were 77,542 newly-registered enterprises with total capital of VND486.1 trillion ($21.7 billion), up 29.2 per cent in number and 37.9 per cent in capital against the same period of 2014.